A survey conducted by Savills illustrates the international preponderance and attractiveness of Lisbon and Porto in the office market and highlights sustainability as an increasingly important factor for investors
The latest survey conducted by international real estate consultants Savills, entitled “Portugal on the Business Service Centres Radar: the Attractiveness of the Real Estate Market, 2021 Edition”, shows that international companies now regard Portugal as a highly attractive market in which to set up business. This attractiveness is based on market fundamentals such as strategic location, the quality of local human resources, a climate of political stability and social peace, sound connectivity infrastructure and a commitment to innovation and digital transition.
Further proof of this attractiveness lies in the international recognition and awards that have resulted in Portugal being ranked as a top destination for investment in multiple sectors, in particular by foreign investors, who have expressed a growing interest in establishing a base in our country.
The country´s system of higher education, where more and more institutions are gaining international recognition, is one of the major foundations of the strength of the Portuguese market with regard to the quality of human resources, training people with talent and ability to respond to the needs of companies and investors. Recent data published by the OECD indicates that 37% of young people between 25 and 34 years of age in Portugal are university graduates.
Business Service Centres as business organisation models of preference
The Business Service Centre or Shared Service Centre sector is an increasingly popular trend designed to meet companies´ needs in relation to optimising resources, ensuring maximum levels of productivity at more competitive costs, while safeguarding the quality of the production process.
There are currently 175 BSC in Portugal, located in Lisbon, Porto, Braga and Aveiro. Data published by AICEP illustrates that 85% of Business Service Centre employees in Portugal are university graduates and 8% are foreigners, 45% of these centres operate in more than one language and 35% provide ICT and software services. Furthermore, there has been an annual growth rate of 14% in the number of centres in the country in the last five years.
The metropolitan areas of Lisbon and Porto are the clear preferences for the implementation of Business Service Centres in Portugal. In recent years, these two hubs of intense economic activity have received important foreign investments as the destination of several Competence Centres. Data shared by AICEP in the Savills report illustrates that the country's capital city welcomed around 40 new IT companies between 2016 and 2020, and is now home to 111 Business Service Centres. Competence centres dedicated to the automotive sector have also multiplied in the city of Lisbon, such as Critical Techworks (a joint venture between the BMW Group and the Portuguese company Critical Software), Mercedes Benz.io and Volkswagen Digital Solutions.
Savills also refers to the noteworthy Tech Visas programme, which is an important tool in enabling Portuguese technology and innovation companies with an international scope to place highly qualified personnel in the domestic market.
Everything suggests that Portugal has what it takes to be the benchmark country for the implementation of BSC, and that the national real estate market, as a whole, is, as we have already seen, and will be capable of adapting to the new trends and requirements of the Business Service Centre sector.
Lisbon office market well prepared to welcome more and more BSCs
The Lisbon office market has been growing on a continuous basis since 2014 and has registered an annual take-up rate of over 200,000 m² since 2018.
In recent years, the commitment to renewing stock and increasing levels of supply in the capital's office market has been the answer, albeit insufficient, to the extremely dynamic demand, with new occupation needs and forms of organisation now reflected in work spaces. The capital has an availability rate of 7.04% and an increase of around 166,000 m² is expected for the 2021-2022 biennium. The price of prime rent currently stands at 25 euros/m²/month.
The Lisbon office market today (composed of 7 zones) competes with the major European capitals, benefitting from the internationalisation and expansion of renowned multinational companies active the most diverse sectors of activity.
Porto: an expanding innovative market with enormous potential
In the Porto office market, occupation by technology companies is considerable compared to other sectors, and accounts for a significant percentage of the companies joining and expanding in this market. Uber and Revolut, in addition to the Portuguese and internationalised entities Prozis and Farfetch, are some of the companies that have chosen to set up business in the “Invincible City”.
Moreover, the presence of these companies confirms the increase in investment in human resources in the northern region, with a particular focus on the area of technology.
The city of Porto now ranks as one of the most attractive European cities to visit, live and invest in, after a major urban rehabilitation process consisting of top-quality redevelopment, preserving the city´s historic nature and heritage while investing in the construction of brand new buildings with remarkable innovative architectural features.
100,000 m² of new office space in Porto is expected for the 2021-2022 biennium. A total of 18 projects will help expand the stock of the office market, thereby ensuring competitiveness vis-à-vis European capitals recognised as destinations with the potential to welcome international occupants looking for strategic locations in which to establish, relocate or expand their operations centres.
The expansion of the Porto office market is concentrated in the peripheral areas around the city centre, including the neighbouring districts of Maia, Matosinhos and Vila Nova de Gaia, which together form the Out of Town zone.
Braga and Aveiro: two markets on the rise
Braga, with one of the lowest aging rates in the country, and Aveiro, with a renowned provision of higher education in the areas of Technology and Innovation, are two other extremely dynamic hubs for the implementation of BCS in Portugal.
Co-working models, a young and attractive population, a low cost of living, good public transport networks and first-rate institutions of higher education make Braga and Aveiro two cities on the rise in the innovation market, with potential for growth and attractive in the eyes of the international Shared Services market.
Sustainability: an increasingly important factor when talking about offices
Sustainability is no longer exclusive to environmentalist discourse, but has taken on increasing significance in the real estate market. The implementation of intelligent energy expenditure management systems, the growing synergies between utilitarian factors and well-being, and the transformation of office space into real living space with an environmental touch (such as indoor gardens) carry increasing weight in investors´ decisions, as ways in which to enhance the well-being of employees, to attract and retain talent and customers and to promote an atmosphere of productivity combined with creativity.
Investment in sustainable building certification results in lower operating costs and affords property added value, among other advantages.
With regard to sustainability, Savills is already at the forefront of this trend in Portugal, having been the first company in the country to have two architects awarded BREEAM AP and WELL AP certification. This year, the international real estate consultancy firm also became a member and committed to the BCSD Portugal – Companies for Sustainability Letter of Principles and joined 119 other companies in the Business Mobility Pact for the city of Lisbon, thereby contributing to more sustainable mobility in the country's capital.
Patrícia de Melo e Liz, CEO of Savills Portugal, says that “Savills has closely followed the evolution of shared services centres, not only in the provision of guidance on real estate transactions for this purpose for several years now, but also in the execution of interior projects in this sector. Sustainability has also been on our list of priorities, and we have already executed a considerable portfolio of facilities that contribute to an improvement in technical conditions to help reduce the ecological footprint. This commitment must continue at full speed, as it is now ever-present in turning our buildings into more sustainable properties with greater comport and flexibility, enabling more and more people from different areas of business with different modus operandi to use them”.